State Senate said to reach deal on MTA bailout

The Senate's Democratic majority announced a tentative agreement yesterday involving all 32 members needed to approve a bailout of New York City's transit system and avoid double-digit fare increases and service cuts.

But even with the bailout, fares will rise on commuter rail lines, and bridge and tunnel tolls will increase. That includes the $10 cash toll on the Verrazano-Narrows Bridge, which is scheduled to rise to $13. Proposals to institute tolls on the East and Harlem river bridges would appear to be dead.

Senate Majority Leader Malcolm Smith of Queens said the deal would include special funding to school districts to exempt them from a payroll tax. Suburban senators had sought a break for school districts in the bailout.

"We have 32 votes for our framework," Smith said. "And we want to pass the bill this week."

Democratic Gov. David Paterson proposed the so-called bullet aid for schools last week as a way to get enough votes for a bailout before fare increases begin at the end of the month.

The Metropolitan Transportation Authority board approved increases ranging from 23 percent to 30 percent, but agreed to shelve its plan if the bailout is approved. Under the bailout, the fares would still rise about 8 percent on average, but layoffs and service cuts would be avoided.

A $1 fee per taxi ride has been cut to 50 cents. That would fund what Smith called a "modest" capital improvement at the MTA. A proposal for another 50 cents per trip to leverage about $1 billion in aid for bridge and highway work upstate and on Long Island was dropped, but Smith said it will be reconsidered in October when a full MTA capital plan is devised.

The proposal now goes to the Democrat-led Assembly, where it is likely to be approved despite some concerns. All 30 Republican senators have said they are opposed to the bailout proposals, meaning Smith will need every Democrat in his 32-30 majority.

State Sens. Brian Foley of Suffolk County and Craig Johnson of Nassau County said they agree to what Smith called "a framework ... to bail out the MTA."

"We are going to limit the devastating fare increases, and you're going to see the end of service cuts," Johnson said.

Foley called the tentative agreement a watershed event for the Senate because the schools to be protected will be from Republican-represented districts as well as districts represented by Democrats.

Smith said the deal will include a "graduated" payroll tax that will decline in the outer rings of the 12-county MTA service region. Under the proposal, employers in Dutchess, Orange and Putnam counties north of the city would pay a tax of 25 cents per $100 of payroll. The remaining counties in the 12-county MTA district, including the city and those on Long Island, would pay 34 cents per $100 of payroll.

Smith said he was seeking a formal deal this week with Paterson and the Assembly's Democratic majority.

"We are encouraged by the agreement in the Senate and are prepared to act immediately to save the fare and prevent massive service cuts," said Dan Weiller, spokesman for Assembly Speaker Sheldon Silver. "We remain hopeful that the final bill will include at least some of the funding for the next MTA capital plan."

The MTA board previously voted to increase the base fare on subways and buses from $2 to $2.50, eliminate two subway lines and 35 bus routes, and curtail service on other lines. Even with the bailout, fares will rise on commuter rail lines, and bridge and tunnel tolls already in place will increase.

The measures are to address a $1.2 billion budget deficit that the MTA blames largely on the recession. MTA officials said the deficit has worsened by another $600 million, which would require deeper cuts or a bigger bailout.

Yesterday, Paterson sought to bring the issue to a close by separating the bailout for operational costs from the long-term capital spending for improvements in subways lines, bus services and bridges. Paterson said the capital budget is best settled perhaps months from now, when the credit markets may be strong enough to provide better deals.

But that could also mean a delay of a $95 million fund, to be collected in 50-cent-per-trip fees for taxis. That money was to be leveraged for more than $1 billion in road and bridge borrowing for upstate and Long Island communities. That would be a common reciprocal agreement when New York City gets a big infusion and one aimed at securing votes outside the MTA service region for the bailout.